Discharge

Condition

A contractual qualification, provision, or clause which creates, suspends, or terminates the obligations of one or both parties to the contract, depending on the occurrence or nonoccurrence of some event.

Tender

Complete vs. Substantial Performance

When a party fails to completely perform her contractual duties, the question arises whether the performance affords the other party substantially the same benefits as those promised. If so, then the first party is said to have substantially performed.

substantially performed.

If a party substantially performs, the contract remains in force and the other party must still perform its duties - although it may be entitled to recover damages for the substantially performing party's failure to perform fully.

Time to Perform

Subjective Satisfaction

When the purpose of the performance is to satisfy personal taste, aesthetics, and the like (e.g., painting a portrait of a customer's beloved), the court will ask whether the party to be satisfied was, in good faith, satisfied or dissatisfied with the performance

Objective Satisfaction

When the purpose of the performance is to serve some function (e.g., roofing a warehouse to keep out the elements), the court will ask whether a reasonable person would be satisfied or dissatisfied with the performance.

Satisfaction of a Third Party

Some contracts require that the performance satisfy some non-party (e.g., an art critic, an architect, an independent lab). Courts tend toward the objective satisfaction standard in these cases, but some have applied the subjective satisfaction test when the third party's expertise goes to the same factors that would lead a court to apply the subjective test if a party's satisfaction was at stake.

Breach

Material Breach

Anticipatory Repudiation

An action by a party to a contract that indicates that she will not perform a contractual obligation due to be performed in the future. Such a repudiation will excuse the non-repudiating party from performing under the contract.

Statute of Limitations

A plaintiff suing for breach of contract must file suit within the time permitted by applicable law. Failure to do so does not technically discharge the parties, but it prevents the wronged party from seeking judicial remedies.

Consequential Damages

Punitive Damages:

Damages designed to punish a wrongdoer and to deter similar conduct in the future. Such damages are generally not recoverable in breach of contract actions, unless the breaching party's actions give rise to a separate tort claim.

Nominal Damages

Although there are special formulae for certain types of contracts, compensatory damages are generally calculated as follows:

The value of the performance as promised
- The value of the performance actually rendered
- The value of any loss avoided, or mitigated, by the non-breaching party
+ Incidental damages to the non-breaching party
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"Market Value" Damages

In cases involving contracts for the sale of goods or, in most states, land, compensatory damages generally equal the difference between the contract price of the goods or land and the fair market price at the time the goods or title to the land was to be delivered.

Liquidated Damages

Contracts often contain provisions requiring the breaching party to pay a sum certain of money if he fails to perform as required. These provisions are enforceable as long as, when the parties formed the contract, damages from a party's breach were difficult to estimate at the time the parties formed the contract, and the amount of liquidated damages is a reasonable estimate of the value of the promised performance.

waiver of breach

limitations on remedies

A contract may include provisions stating that
(1) no damages can be recovered for certain types of breaches, or
(2) damages will be limited to a maximum amount, or
(3) that any breach will result in damages in a pre-determined amount

Exculpatory Clause

Limitation-of-Liability Clause

A provision expressly limiting the damages recoverable for certain types of breaches to an agreed amount. If the non-breaching party's damages are less than the limit, then her actual damages, rather than the limit, will control.